there is a potential downside to not having taxes withheld, which is an underpayment of your estimated tax penalty.
There will be no federal penalties for not paying in enough taxes during the year if withholding
- And timely estimated tax payments are equal to or exceed 90% of your 2022 tax
or
- And timely estimated tax payments are equal to or exceed 100% of your 2021 tax (110% if your 2021 adjusted gross income was more than $150K)
or
- the balance due after subtracting taxes withheld from 90% of your 2022 tax is less than $1,000
or
- your total taxes are less than $1,000
state laws differ
